Q4 economic contraction supports Japanese policy

ACCOUNTING FOR ACTIONS:Japan’s government has defended its monetary expansion, saying that it is protecting the country’s currency from deflation

Reuters, TOKYO

However, more recent sentiment surveys and leading indicators such as machinery orders point to a gradual recovery.

“The economy is still on the recovery track, and there is a stimulus package that will help from the spring. The Bank of Japan is also likely to continue monetary easing,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.